Ahead of a critical interest rate announcement from the US Federal Reserve, European stocks dipped on Wednesday. Investors were preparing for a potential start to a period of monetary easing in the world’s leading economy. Leading the losses in substantial sectors, the pan-European Stoxx 600 index fell by 0.5%, with the food and drinks sector seeing a 1% drop.
Money markets projected a 53% probability of the Fed decreasing the interest rate by 0.5 percentage points a few hours after the closure of the European markets, according to data from CME’s FedWatch Tool. Such a move would mark the first reduction by the American central bank in four years, following a season of bold inflation-curbing increases.
In Dublin, banking shares saw a mixed response, as the Iseq All Share index dropped by 0.6% to 9,789.36. Of note were AIB, Bank of Ireland, and PTSB, whose shares declined 0.8%, increased 0.6%, and rose 2.4% respectively.
Housebuilding companies also attracted attention when Cairn and Glenveagh Properties shares dipped by 0.5% and 0.9%, respectively, after the Central Bank announced a requirement for 52,000 new homes annually over the next 25 years. Shares in Ryanair fell by 0.8% to €16.10, slightly surrendering the previous day’s increase that was spurred by the airline’s confident booking forecast.
In the UK, stock indexes fell as investors held back on betting on interest rate reductions by the Bank of England, while worldwide risk sentiment was volatile ahead of the Fed’s decision. The FTSE 100 blue-chip index experienced the steepest decline among its European counterparts, closing 0.7% down. Accompanied by a rise in the pound following inflation data, export-focused FTSE 100 companies faced additional pressure.
Reckitt Benckiser witnessed a 1.2% uptick in shares owing to a media report suggesting early discussions with potential buyers regarding the sale of its household products division. However, losses were widely distributed across most sectors barring defence and telecoms.
In Europe, the shares of Italian alcohol company Campari underwent a 7.5% decline post the immediate resignation of its CEO Matteo Fantacchiotti, who was just five months into his tenure, citing personal grounds. The influential healthcare sector index saw a decline of 0.7% as Danish pharmaceutical firm Novo Nordisk declined 2.4% in response to a report predicting its diabetes drug Ozempic, is a potential candidate for a price reduction in the U.S.
Among various other stocks, Germany’s BASF experienced a 2.4% surge following a media report stating the chemical company’s plan to gear its agricultural chemicals division for an Initial Public Offering (IPO) in the coming years as part of an upcoming restructuring plan. Shares of French company Ubisoft Entertainment experienced a significant 6.6% escalation after BMO Capital Markets elevated the stock rating to outperform, equating to a purchase, characterising the shares as undervalued.
In New York, the city’s chief stock indices were trending downwards during the early afternoon trading hours ahead of the Fed’s rate decision. U.S markets have seen an upsurge this year, with all three major indices hitting record highs, fueled by prospects of reduced interest rates in light of subdued inflation and a gradually easing employment market.
Esteemed growth stocks like Apple and Alphabet saw an upward trend while Microsoft experienced a downward slide. Intuitive Machines saw a rise in stocks after securing a $4.8 billion navigational service contract from NASA. US Steel shares also increased following reports suggesting that the U.S national security panel reviewing Nippon Steel’s acquisition bid for the U.S-based steel manufacturer allowed the companies to reapply for deal approval. (Additional source: Reuters)